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France: Tax-Efficient Sectors

Young, Innovating Enterprises

Young innovating enterprises with significant R& D are defined as follows:

  • less than eight years old; fewer than 250 employees; turnover below EUR50m.
  • Direct R & D expenses should be at least 15% of total expenses (net of outsourced R & D).
  • 75% of the capital should be owned by individuals (even indirectly) or by risk-capital companies.

No taxes will be levied for first three years, and there will be a 50% exemption for years four and five. However, financial income is taxable.

Municipalities may exempt new buildings from property taxes and professional tax owned by such enterprises for a period of seven years.

The EU does not allow such advantages to exceed a ceiling of EUR100,000 per year.

Normally, the holder of shares in companies pays capital gains tax if the sales value exceeds EUR15,000. However, for shares in such companies, there will be no capital gains tax if the investor owns less than 25% of the company and if he sells them after having held them for three years.



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